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Editorial: Pass legislation to protect Maryland's taxpayers

Tax fraud is becoming more prevelant, it seems, as crooks are able to compromise people's identities and use that information to file false tax returns, or fly-by-night tax preparers are setting up shop and taking advantage of citizens by promising too-good-to-be-true refunds. Meanwhile, the agencies responsible for tax returns struggle to keep up because of antiquated policies.

The Taxpayer Protection Act, formally crossfiled in the state Senate and House of Delegates as SB304 and HB424, respectively, would give Maryland's Comptroller additional powers to combat tax fraud. The bill has the support of Gov. Larry Hogan and was introduced as part of his legislative package this year, and deserves the support of the entire state legislature as well.

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Tax fraud affects everyone, because when refunds stemming from fake tax returns are paid, it's money coming out of the state coffers. When the real filer is due a refund, which they are obligated to receive, that's additional funds coming out of state revenues, which are, of course, coming from legitimate tax-paying residents.

Online filing, which makes filing taxes easy and convenient for law-abiding taxpayers, also allows swindlers to file fake returns using stolen personal information by the boatloads. Most returns can be filled out with basic information such as a name, birth date and Social Security number, and can be paid to any bank account or mailed to any recipient as a prepaid debit card, making it easy to hide or launder refund money once it's paid out, according to MarylandReporter.com.

While no definitive numbers exist regarding how many fraudulent returns are filed in Maryland or how much the state pays out in phony returns, Comptroller Peter Franchot told delegates during a hearing Tuesday that his office identified more than 13,000 fake tax returns last year, saving an estimated $21 million, according to the Baltimore Sun. Over the past decade since Franchot has been in office, he estimated saving the state $174 million by blocking more than 76,000 fraudulent returns.

It's not a stretch to think there are thousands more phony returns not being identified and millions of dollars in taxpayer money being paid out to con-artists.

To crack down on this, the Comptroller is seeking to have the office's Field Enforcement Bureau be empowered with the ability to apply for warrants that allow them to search documents belonging to tax preparers suspected of fraud. Currently, field agents can only get documents and records that are willingly surrendered by suspected fraudsters, something Comptroller Peter Franchot told MarylandReporter.com rarely happens because, while those individuals "may be crooked … they're not stupid."

The act would also help weed out unscrupulous tax preparers that seem to be popping up recently in Maryland's urban areas by requiring anyone who prepares tax returns for a fee, even if employed by a tax accountant, to be licensed by the State Board of Individual Tax Preparers. Under the bill, fines could also be levied against tax preparers for filing fraudulent returns and the Attorney General's Office would be able to seek injunctions against rouge tax preparers, according to the Baltimore Sun.

Similar legislation was stalled on the last day of session a year ago, potentially because of a rift between Franchot and fellow Democrat, Senate President Mike Miller. In addition to the Republican govenor, the Taxpayer Protection Act of 2017 also has support from Attorney General Brian Frosh, a Democrat, and the trade association for the state's certified public accountants. We'd hate to see good legislation with wide support get hung up because of political grudges.



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